MEMORANDUM AND DECISION GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION TO DISMISS

Plaintiffs Catskill Development, L.L.C. ("Catskill"), Mohawk
Management, L.L.C. ("Mohawk") and Monticello Raceway Development
Co., L.L.C. ("Monticello") (collectively, the "Catskill Group"),
bring this action in diversity against Park Place Entertainment
Corp. ("Park Place"), claiming tortious interference with
contractual relations, interference with prospective business
relationships, unfair competition, and violations of the Donnelly
Act, N.Y. Gen. Bus. Law § 340. Plaintiffs allege that defendant,
one of the world's largest casino companies, wrongfully induced
officials of the St. Regis Mohawk Nation ("Mohawks") to terminate
the Mohawks' contractual agreements and business relationships
with plaintiffs relating to the development and management of a
proposed $500 million Native American casino at the Monticello
Raceway in Sullivan County, New York (the "Casino Project").

The case is before me on defendant's motion to dismiss. For the
reasons below, I grant defendant's motion to dismiss plaintiffs'
claims for tortious interference with contractual relations, for
unfair competition, and for violations of the Donnelly Act. The
motion to dismiss plaintiffs' claim for interference with
prospective business relations is denied.

I. BACKGROUND

The factual allegations below are taken from plaintiffs'
complaint and documents relied on within or attached to the
complaint.

A. Tribal Gaming in New York

Casino gambling is illegal in New York State. However, a
federal statute, the Indian Gaming Regulatory Act ("Gaming Act"
or "IGRA"), 25 U.S.C. § 2701 — 2721 (1988), permits different
types of gaming, including casino gambling, on Native American
land under specified conditions.

The act classifies gaming activities into three different
categories. Tribes have exclusive jurisdiction over Class I
gaming, which includes social games and traditional forms of
Indian gaming connected to tribal ceremonies. 25 U.S.C. § 2703
(6), 2719(a)(1). Class II gaming, defined by the Gaming Act
to include "the game of chance commonly known as bingo (whether
or not electronic, computer or other technologic aids are used in
connection therewith) . . . including (if played in the same
location) pull-tabs, lotto, punch boards, tip jars, instant
bingo, and other games similar to bingo . . .," are regulated by
the National Indian Gaming Commission (NIGC).*fn1 All other
gaming activity (including both electronic gaming devices and
traditional casino games, such as card
tables, craps, roulette, and slot machines) is Class III gaming.

Under the Act, gaming management contracts*fn3 for Class III
gaming must now be approved by the Commissioner of the NIGC.
25 U.S.C. § 2705(a), 2711(b). Regulations passed pursuant to the
IGRA state that such contracts "shall become effective upon
approval by the Chairman," 25 C.F.R. § 533.1, and that a gaming
management contract not approved by the NIGC is void.
25 C.F.R. § 533.7. See also International Gaming Network v. Casino Magic
Corp., 120 F.3d 135 (8th Cir. 1997) (noting that agreement to
build and manage casino on tribal land was not binding on parties
because it lacked NIGC approval); Casino Resource Corp. v.
Harrah's Entm't, Inc., 243 F.3d 435 (8th Cir. 2001). In
addition, collateral agreements*fn4 to the management contract
that relate to Indian gaming must also be approved, and are thus
void without approval. 25 U.S.C. § 2711(a)(3). See also U.S. ex.
rel. Mosay v. Buffalo Bros. Mgmt., 20 F.3d 739, 743
(7th Cir. 1994) (explaining effect of IGRA on contracts with
Indian tribes).

[t]he Secretary, after consultation with the Indian
tribe and appropriate State, and local officials . .
. determines that a gaming establishment on newly
acquired lands would be in the best interest of the
Indian Tribe and its members, and would not be
detrimental to the surrounding community, but only if
the Governor of the State in which the gaming
activity is to be conducted concurs in the
Secretary's determination. . . .

25 U.S.C. § 2719(b)(1)(A) Unlike Section 2711, there is no
regulation related to Section 2719 which explicitly states that
contracts creating off-reservation gambling projects are void
without the Secretary's approval.

2. Section 81

Defendant argues that the agreements at issue in the present
case also implicate an earlier statute relating to contracts with
Indian parties, 25 U.S.C. § 81. Under Section 81, non-Indian
parties contracting with Indian tribes must submit certain
contracts to the Secretary of the Department of the Interior
(through the Bureau of Indian Affairs) for approval. Contracts
requiring approval under Section 81 and not approved by the BIA
are invalid. See Green v. Menominee Tribe of Indians in
Wisconsin, 47 Ct.Cl. 281, aff'd. 233 U.S. 558, 34 S.Ct. 706, 58
L.Ed. 1093 (1914).

At the time plaintiffs made their agreements, and until March
14, 2000, when Section 81 was amended, the statute read:

No agreement shall be made by any person with any
tribe of Indians, or individual Indians not citizens
of the United States, for the payment or delivery of
any money or other thing of value, in present or in
prospective, or for the granting or procuring any
privilege to him, or any other person in
consideration of services for said Indians relative
to their lands, or to any claims growing out of, or
in reference to, annuities, installments, or other
moneys, claims, demands, or thing, under laws or
treaties with the United States, or official acts of
any officers thereof, or in any way connected with or
due from the United States, unless such contract or
agreement be executed and approved as follows:

Second. It shall bear the approval of the Secretary
of the Interior and the Commissioner of Indian
Affairs indorsed upon it.

. . . . All contracts or agreements made in violation
of this section shall be null and void.

Many parties contracting with an Indian tribe could not be
certain approval was required unless and until the question was
fully litigated. Thus, because of the harshness of the penalty
(invalidation), most contracts, regardless of whether they fell
within Section 81, were submitted to the BIA for Section 81
approval. See S.Rep. No. 106-150, Encouraging Indian Economic
Development, To Provide for the Disclosure of Indian Tribal
Sovereign Immunity in Contracts Involving Indian Tribes, and for
Other Purposes, Sept. 8, 1999, at 5-7 (hereinafter "Senate
Report").

The statute was amended in part to address this problem and to
provide more guidance on the types of contracts that must be
approved in order to be valid. See id. It now reads:

No agreement or contract with an Indian tribe that
encumbers Indian lands for a period of 7 or more
years shall be valid unless that agreement or
contract, bears the approval of the Secretary of the
Interior or a designee of the Secretary.

25. U.S.C. § 81(b) (2000). The Senate Report on the bill
discussed the types of contracts that should not come within
Section 81. By replacing the phrase "relative to Indian lands"
with "encumbering Indian lands," it explained that the bill will:

no longer apply to a broad range of commercial
transactions. Instead, it will only apply to those
transactions where the contract between the tribe and
a third party could allow that party to exercise
exclusive or nearly exclusive proprietary control
over the Indian lands.

Senate Report at 9. The statute requires the Secretary to develop
regulations specifying the types of contracts that fall within
Section 81. As of the date of this opinion, no such regulations
exist.

3. Relationship between the IGRA and Section 81

Indian gaming has been subject to regulation under both Section
81 and the IGRA.

At least in part, the IGRA was passed in response to the
uncertainty over these holdings. Congress noted in the text of
the statute that "[f]ederal courts have held that [Section 81]
requires Secretarial review of management contracts dealing with
Indian gaming, but does not provide standards for approval of
such contracts." P.L. 100-497 (1988). See also Senate Report at
5-7. Thus, as one court has explained:

When section 81 is read in conjunction with the
[IGRA], two distinct, successive regulatory regimes
can be seen. One is administered by the [BIA] under
section 81, the other by the [NIGC] under the [IGRA].
In the first regime, contracts relating to Indian
lands, including casino management contracts, must be
submitted to the Bureau for approval under criteria
undefined by statute or regulation; failure to submit
exposes the contractor to the fell sanction of a qui
tam suit. In the second regime, a class of contracts
— casino management contracts — are carved out of
section 81 and subjected to the exclusive regulatory
authority of the new Commission administering the new
Act, along with certain contracts — contracts
collateral to casino management contracts — that
never were subject to section 81.
25 U.S.C. § 2711(a)(3); 25 C.F.R. § 502.5.

The court in Mosay questioned the continuing applicability of
Section 81 to Indian gaming management contracts, and to other
agreements that fall within the IGRA:

We doubt that the qui tam provision of section 81
remains applicable to contracts now governed by the
Indian Gaming Regulatory Act. Contractors would be
subject to enormous legal risk that one of their
contracts with an Indian tribe might be held to be a
collateral agreement that they should have but failed
to file, in which event they would have to repay
everything they had received under the contract. Qui
tam liability would expand indefinitely at the very
moment that Congress had created a new administrative
remedy and vested its enforcement in a new,
specialized agency with its own detailed, measured,
modern set of remedies.

Mosay at 743; see also Wisconsin Winnebago, 762 F.2d at 619
(holding that "section 81 governs transaction relative to Indian
land for which Congress has not passed a specific statute.").

According to Plaintiffs, the Mohawks had every reason to
believe the Governor's concurrence would be readily procured. In
support of this assertion, they point to two documents. The first
is a March 14, 2000 letter from John F. O'Mara, the Governor's
advisor on Indian casino issues and Indian land claims, to Robert
A. Berman of Catskill. After taking "strenuous exception" to
unidentified comments from plaintiff in an earlier letter, O'Mara
continues:

Let me assure you that any decisions which Governor
Pataki makes with respect to the issue of casino
gambling in New York will be made only in the best
interests of the citizens of New York State. The
Governor has expressed his strong support for a
casino in the Catskills and I am confident that when
the St. Regis Mohawks have obtained federal
permission the Governor will respond expeditiously.

(Compl. at Ex. E.) Plaintiffs also point to a June 15, 1999
letter, purportedly signed by Governor Pataki and written to the
Supervisor of the Town of Thompson in Monticello, which stated in
part:

Naturally, it has always been my goal to encourage
all economic development strategies that will help
ensure that Sullivan County and the City of
Monticello enjoy the same economic resurgence that is
taking place elsewhere throughout the State.
Certainly, one project that shows tremendous
potential is the St. Regis Mohawk Tribe's proposal to
establish an off-reservation casino at the Monticello
Raceway.

(Compl. at Ex. F.) Referring to a recent agreement between the
State and the Tribe to allow video lottery games at the Akwesasne
casino, the Governor said:

(Id.). Pataki then confirmed the Town Supervisor's understanding
that the Tribe's application for federal approval was still
pending, and added:

It is also my understanding that the Mohawk Tribe and
the management company, Catskill Development, have
now provided the additional information that was
requested by BIA. Assuming the BIA's final
determination is favorable, I am prepared to attempt
to negotiate in good faith an amendment to the St.
Regis Mohawk Tribe's gaming compact for an
off-reservation casino at the Monticello Raceway in
Sullivan County.

(Id.) (emphasis added)

As noted above, the gaming compact had to be amended. At the
very least, the amendment would have to allow for electronic
gaming at the Raceway site, although it may have to be amended to
allow Class III gaming of any kind at the Raceway — again,
without a copy of the original compact, I cannot be sure.
However, nothing in the text of Section 2719, under which the BIA
approved the land-into-trust application, requires that an
amended compact be in place in order for the Governor to provide
his concurrence. Nevertheless, it appears from the letter cited
above that Pataki intended to link renegotiation of the compact
to his concurrence with the BIA. Regardless of what remained to
be negotiated between the Tribe and the Governor, it is
undisputed that Pataki did not, and at the time of this opinion
still has not, made any such response to the BIA's recommendation
that the land-into-trust application be approved.

Neither party has provided the Court with any information on
whether the Tribe and Catskill had begun the process of seeking
approval for the management contract, which had to be approved by
the NIGC under 25 U.S.C. § 2711. However, it is undisputed that
no such approval was given.

E. Park Place's Alleged Involvement

Plaintiffs claim that the reason the project was never approved
is because they were sabotaged by defendant's efforts to scuttle
the Monticello Raceway casino project. By mid-1999, when
according to plaintiffs it "became clear" that both the Federal
Government and the Governor favored the casino project, Park
Place principals allegedly sought an introduction to the Mohawks
through former Senator Alfonse D'Amato, who was "acting as a
consultant to Park Place." D'Amato introduced Park Place
executives Goldberg and Cummis to Ivan Kaufman, CEO of Presidents
Resorts Casino, Inc., ("Presidents"), the company that managed
the Mohawk's small Akwesasne casino. The Mohawks owed the State
of New York millions of dollars from the operation of the casino,
which was losing money every month. Park Place allegedly feigned
an interest in that casino in order to become involved with the
Mohawks, and that it deliberately held out a false promise of
financing to Presidents in exchange for an introduction to the
Tribe. Later, after gaining the confidence of the Mohawk chiefs,
Goldberg and Cummis "began to link Park Place's financial
commitments to the Akwesasnse casino to participation by Park
Place in the Casino Project itself." As part of their efforts,
plaintiffs complain that Goldberg and Cummis intentionally
maligned Presidents and plaintiffs and to "actively advise the
Mohawks to break their contract with Plaintiffs." (Compl. at 84 —
90.)

On April 11, 2000, Cummis wrote to Kaufman, forswearing any
commitment to the Akwesasne casino:

Plaintiffs allege that, in spite of the letter, Cummis met the
very next day with the Governor's counsel, Patrick Kehoe,
ostensibly to discuss Park Place's potential management of the
Akwesasne casino. (Compl. at Ex. K.) At this meeting, Cummis
allegedly learned from Kehoe that the Governor was preparing to
concur with the BIA regarding the Monticello casino project.

When the Mohawks' Tribal Administrator asked Catskill about
potential involvement of Park Place in the project, Catskill
allegedly informed the Tribe that it was not interested in any
"partners" whose motives it could not determine and who might
actually be adverse to the project. Plaintiffs allege that on
April 13, 2000, the Tribal Administrator told a Catskill
representative that the Mohawks had been advised by Cummis that
he had met with the State, and that the Governor would not
approve the Casino Project without Park Place's involvement.

Plaintiffs assert that Cummis and Goldberg flew to the Mohawk
reservation on April 14, 2000, with the intent to "steal the
Mohawks from plaintiffs and destroy the Casino Project before the
release of the Governor's concurrence letter." Defendant
allegedly told the Tribal Council that Pataki would not approve
the Casino Project without Park Place's involvement and falsely
represented that the State was about to shut down the Akwesasne
casino for unpaid revenue sharing fees. Plaintiffs also allege
that defendant intentionally misrepresented to the Mohawks that
the federal approval granted to Catskill was "portable"; that a
casino project on another site would actually be approved within
four months, rather than three to four years; that Catskill and
its principals were "unsuitable"; that the Mohawks' agreements
with plaintiffs were not validly authorized or properly executed
by the Mohawks; and that plaintiffs could not get NIGC approval.
(Compl. at 101 — 106.)

On April 14, 2000, the Tribe entered into a written agreement
with Park Place, which set forth "certain understandings" reached
between the parties, namely, that (1) Park Place will be the
exclusive developer and manager of any Mohawk casinos in New York
State; (2) the Mohawks will receive 70% of profits after paying
back Park Place for "advances" for the cost of development and
construction; (3) Park Place will begin construction within 36
months of the agreement unless otherwise agreed by the parties;
and (4) Park Place will pay the Mohawk's $3 million and indemnify
the Tribe from litigation losses resulting from the Tribe's
termination of its agreements with plaintiffs.*fn6 This document
was signed by the "Three Chiefs" of the Tribe (Smoke, Ransom, and
Thompson), three sub-chiefs, and Park Place President and CEO
Arthur Goldberg. (Compl. at Ex. M.)

After the agreement with Park Place was signed, plaintiffs also
describe numerous alleged actions by Park Place and the Mohawks
to interfere with or to prevent plaintiffs from striking a new
deal with another tribe to use the property at the Monticello
Raceway.*fn7 (Compl. at 118 — 131.)

On April 26, 2000, independent representatives of the Mohawk
Tribe (including prior chiefs), filed a class action complaint in
the St. Regis Mohawk Tribal Court against Park Place, Goldberg
and Cummis, and the Three Chiefs who signed the agreement, asking
the Court to nullify the agreement and seeking billions of
dollars in damages. Soon after the complaint was filed, the Three
Chiefs declared the Tribal Court invalid, raided the Court
facilities, and removed the Court's computers and files. (Compl.
at 116.) On June 2, 2000, Park Place brought suit in the Northern
District of New York seeking: (1) an injunction against the
Tribal Court proceeding and (2) a declaration that the Tribal
Court was invalid and without authority to adjudicate the claims
asserted. On September 18, 2000, Judge McAvoy dismissed Park
Place's action for lack of subject matter jurisdiction. Park
Place Entm't Corp., 113 F. Supp.2d at 323 (noting that
"significantly, the dispute does not involve a question of the
limits of the Tribal Court's jurisdiction, but rather a question
of whether the Tribal Court is a valid Tribal authority.") As of
the date of this opinion, Park Place had appealed the district
court's dismissal to the Second Circuit.

On March 20, 2001, the Mohawk Tribal Court entered a default
judgment against Park Place and the other defendants in that
case, and awarded $1.782 billion in actual damages and $5 million
in punitive damages to plaintiffs. The Court sets forth findings
of fact and conclusions of law regarding the validity of the
contracts and the actions of Park Place and Catskill. See
Arquette v. Park Place Entm't Corp., Case No. 00C10133GN, Mar.
20, 2001 (St. Regis Mohawk Tribal Court, Hogansberg, NY). Park
Place has advised the Court that it views this judgment as a
nullity — a position it hopes will be sustained by the Second
Circuit.

1. Comity Does Not Require A Stay of Proceedings Pending Final
Appeal Of The Tribal Court Action

If personal and subject matter jurisdiction exists, a federal
court may stay proceedings, or dismiss the case pending
exhaustion of tribal remedies, as a matter of comity. If there is
a tribal court that has, or may have, jurisdiction, the federal
policy supporting tribal self-government supports deferring to
the tribal court, particularly on issues of tribal court
jurisdiction. See Bank of Okla. v. Muscogee (Creek) Nation,
972 F.2d 1166, 1170 (10th Cir. 1992) (applying deferral rule when
allegations were that the tribal court has no jurisdiction
because the relevant activities took place outside the
reservation); Iowa Mutual Ins. Co. v. LaPlante, 480 U.S. 9, 107
S.Ct. 971, 94 L.Ed.2d 10 (1987) (applying comity rule to
diversity cases). The same comity principles require deferral to
a tribal court's determination of the meaning of its own
jurisdictional statutes. See Twin City Const. Co. v. Turtle
Mountain Band, 911 F.2d 137 (8th Cir. 1990). If the tribal court
decides it has jurisdiction, the same deference policy precludes
relitigation of issues resolved in tribal courts. Iowa Mutual,
480 U.S. at 19, 107 S.Ct. 971. However, the deferral rule is not
mandatory, particularly if there is no pending tribal court
action and/or federal or state law controls resolution of the
issues in the case. See, e.g., Altheimer & Gray v. Sioux Mfg.
Corp., 780 F. Supp. 504, 1991 WL 261332 at *4 (N.D.Ill. 1991),
rev'd on other grounds, 983 F.2d 803 (7th Cir. 1993) (contract
stipulated that disputes would be resolved under Illinois law in
Illinois state and federal courts), cert. denied,
510 U.S. 1019, 114 S.Ct. 621, 126 L.Ed.2d 585 (1993).

Plaintiffs' claims for inducing breach of contract and
interference are governed by New York's common law, and their
other claims arise under New York statutes. The issue of the
validity of the contracts requires application of Federal law, as
does Defendant's Noerr-Pennington defense. The case involves no
questions of tribal law, and no parties to the case are members
of the Tribe. Moreover, only defendant Park Place is before both
the Tribal Court and this Court. Plaintiffs in the Tribal Court
action were not parties to the contracts — they are tribal
members who disagree with the Tribal Council's decision to sever
the Tribe's ties with Catskill. Comity does not compel me to
abstain from deciding this case.

2. The Tribal Court Ruling Does Not Bar Resolution Of
Plaintiffs' Claims

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides
for dismissal of a complaint that fails to state a claim upon
which relief can be granted. The standard of review on a motion
to dismiss is heavily weighted in favor of the plaintiff. The
Court is required to read a complaint generously, drawing all
reasonable inferences from the complaint's allegations.
California Motor Transport Co. v. Trucking Unlimited,
404 U.S. 508, 515, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972). "In ruling on a
motion to dismiss for failure to state a claim upon which relief
may be granted, the court is required to accept the material
facts alleged in the complaint as true." Frasier v. General
Electric Co., 930 F.2d 1004, 1007 (2d Cir. 1991). The Court must
deny the motion "unless it appears beyond doubt that the
plaintiff can prove no set of facts in support of his claim which
would entitle him to relief." Stewart v. Jackson & Nash,
976 F.2d 86, 87 (2d Cir. 1992) (quoting Conley v. Gibson,
355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).

Defendant moves to dismiss Count 1, intentional tortious
interference with contractual relations, on the ground that there
was no enforceable contract in place at the time defendant is
alleged to have induced the Mohawks' breach. Defendant also moves
to dismiss Count 2, interference with prospective business
relationship, on the grounds that plaintiffs have failed to
allege (1) "wrongful conduct," and (2) that but for Park Place's
conduct, plaintiffs would have succeeded in building their
casino. Park Place moves to dismiss Count 3 for unfair
competition on the same grounds as Count 1, and also on the
grounds that plaintiffs have failed to allege any
misappropriation of property. Defendant argues for dismissal of
Count 4 on the grounds that plaintiffs have not alleged any of
the elements of a Donnelly Act claim. Finally, defendant argues
that the entire complaint should be dismissed because Park
Place's alleged actions in lobbying the Mohawks are fully
protected by the Noerr-Pennington doctrine and therefore
cannot form the basis for either a tort or antitrust claim.

That plaintiffs and the Mohawks had entered into agreements is
beyond dispute. So is defendant's knowledge of the agreements.
See supra, section I.E. Plaintiffs' allegations of interference
are more than sufficient. And the existence of an indemnity
agreement in favor of the Mohawks by Park Place supports a
finding of knowing and wrongful interference. See, e.g., Texaco
v. Pennzoil, 729 S.W.2d 768, 802-03 (Tex.App. 1987), cert.
dismissed 485 U.S. 994, 108 S.Ct. 1305, 99 L.Ed.2d 686 (1988).

However, the New York Court of Appeals has made clear than an
essential element of a claim for tortious interference of
contract is the existence of an enforceable contract, as well
as its breach as a result of the defendant's tortious conduct.
NBT Bancorp Inc. v. Fleet/Norstar Financial Group, Inc.,
87 N.Y.2d 614, 621-22, 641 N.Y.S.2d 581, 584-86, 664 N.E.2d 492
(1996). Defendant claims that the agreements between Catskill and
the Tribe are not enforceable contracts because they had not been
approved as required under the IGRA or Section 81.*fn9 Defendant
is correct.

1. The gaming management agreement is void is under 25 U.S.C.
§ 2711(b)

The Gaming Management Agreement contemplates a relationship
between Catskill and the Tribe under which Catskill would be
primarily responsible for the organization and operation of the
casino, and would give the Tribe a portion of the profits. The
management agreement required NIGC approval.
25 U.S.C. § 2711(a)(1). Management agreements that do not have NIGC approval
are void and unenforceable. 25 C.F.R. § 533.7. The Management
Agreement, under which Catskill would earn its gaming profits,
was not approved at the time defendant allegedly interfered with
the agreement. Thus,
there was no valid and enforceable contract with which defendant
could interfere.

Collateral agreements executed in conjunction with gaming
management contracts are included in the definition of management
contracts, and thus are also void absent NIGC approval.
25 U.S.C. § 2711(a)(3); 25 C.F.R. § 533.7. A collateral agreement is
defined as

any contract, whether or not in writing, that is
related, either directly or indirectly, to a
management contract, or to any rights, duties or
obligations created between a tribe (or any of its
members, entities, or organizations) and a management
contractor or subcontractor (or any person or entity
related to a management contractor or subcontractor).

25 C.F.R. § 502.5.

Each of the agreements executed by the parties relates either
directly or indirectly to rights or obligations created between
the Tribe and Catskill or one of its affiliates under the
Management Agreement:

— The Land Purchase and Mortgage Agreements effect the transfer
and lease of the Raceway property for the purpose of building and
operating the casino. Catskill will be paid for this transfer by
profits from the casino, which, under the Management Agreement,
Catskill will operate.

— Under the Development and Construction Agreement, Catskill
agreed to design, construct and furnish the casino, as well as
assist the Tribe in obtaining a loan to pay for the costs of
construction of the facility. While this agreement provides no
additional compensation to Catskill, the Management Agreement
refers to need for Catskill's "expertise, experience and ability
to assist the [Tribe] in obtaining financing to construct and
develop" the casino and "to manage, operate and maintain" the
casino, as well as "to instruct the [Tribe] and others in the
operation of a first-class gaming facility." (Carpinello Decl. at
Ex. C at 1-2.) The Construction Agreement thus relates directly
to Catskill's right and obligations under the Management
Agreement.

Defendant claims that the mortgage agreement was not executed,
and plaintiffs do not dispute this contention. The mortgage
agreement would have been executed upon the placing of land into
trust, an event which had not yet occurred. Thus, as an
alternative grounds for invalidity, there is no basis on which I
can find that a signed, executed mortgage agreement existed
between the parties. Furthermore, as an agreement that encumbers
Indian lands for a period of more than seven years, the agreement
is invalid without BIA approval under the amended Section 81.

b. Shared Facilities Agreement

The shared facilities agreement, which sets out the terms by
which the plaintiffs and the Mohawks were to coordinate operation
of the casino facilities, expressly states that it is contingent
upon the conveyance of the subject property to the U.S. in trust
as provided for in the Land Purchase Agreement. The conveyance of
the land into trust is a condition precedent to the validity of
the contract, and it did not occur, thus creating an alternative
grounds for its invalidity. Cauff, Lippman & Co. v. Apogee
Finance Group, Inc., 807 F. Supp. 1007, 1022 (S.D.N.Y. 1992);
Office of the Comptroller General of Republic of Bolivia on
Behalf of Bolivian Air Force v. Int'l Promotions & Ventures,
Ltd., 618 F. Supp. 202, 207 (S.D.N.Y. 1985).

c. Development and Construction Agreement

Even if the IGRA does not apply to the Development and
Construction Agreement, that agreement must be approved under
Section 81. See United States v. D & J Enterprises, No.
93-C-233-C, 1993 WL 767689 (W.D.Wis. Dec. 23, 1993) (applying
analysis used to evaluate whether management contracts are
"relative to Indian lands" to non-management, development and
construction agreements).

d. Land Purchase Agreement

Defendant argues that the Land Purchase Agreement is also void
because the trust transfer had not yet been approved under
Section 2719 and Section 81. This is not the case.

Under 25 U.S.C. § 2719, the Secretary of the Interior, with the
Governor's concurrence, must approve the application to transfer
the land into trust. Without the Governor's concurrence, the
approval was not complete. However, nothing in Section 2719
explicitly invalidates contracts to purchase land held in trust
where the underlying land-into-trust application has not been
approved. Therefore, the Land Purchase
Agreement is not invalid under Section 2719.

Thus, no statutory provision other than Section 2711 acts to
invalidate the Land Purchase Agreement.*fn12 Nonetheless, I have
already concluded that the Land Purchase Agreement is void as
collateral to the Management Agreement.

Because I find that all of the agreements between Catskill and
the Tribe are invalid under Section 2711, plaintiffs' First Cause
of Action is dismissed.

D. Plaintiffs State A Claim For Interference With Prospective
Business Relations

A defendant becomes liable for tortious interference with a
plaintiff's business relations when four conditions are met: (1)
there is a business relationship between the plaintiff and a
third party; (2) the defendant, knowing of that relationship,
intentionally interferes with it; (3) the defendant acts with the
sole purpose of harming the plaintiff, or, failing that level of
malice, uses dishonest, unfair, or improper means; and (4) the
relationship is injured. Goldhirsh Group, Inc. v. Alpert,
107 F.3d 105, 108 (2d Cir. 1997). "To state a claim for tortious
interference with prospective business relations, a valid
contract is not necessary." See Hannex Corp. v. GMI, Inc.,
140 F.3d 194, 205 (2d Cir. 1998). "[A] plaintiff can recover if that
plaintiff can prove that the defendant tortiously interfered with
`a continuing business or other customary relationship not
amounting to a formal contract.'" Id. (quoting Restatement
(Second) of Torts § 766B (1979)).

It is indisputable that plaintiffs had a business relationship
with the Mohawks, and the prospect of their jointly exploring a
major casino gambling opportunity. Defendant's knowledge of that
relationship is also beyond question. The issues here are two:
whether plaintiffs have met the "sole purpose or malice"
requirement, and whether the relationship was in fact injured.

1. Plaintiffs Have Adequately Plead Wrongful Means

If the defendant's interference is intended, at least in part,
to advance its own competing interests, the claim will fail
unless the means employed were wrongful. Defendant argues for the
application of the wrongful means standard enunciated in PPX
Enterprises, Inc., v. Audiofidelity
Enters., Inc., 818 F.2d 266, 269 (2d Cir. 1987), where the
Second Circuit in dicta limited those means to criminal or
fraudulent conduct. However, another panel of the Second Circuit
has stated that "this interpretation since has been recognized as
unduly narrow and not in accordance with New York law." Hannex
Corp. v. GMI, Inc., 140 F.3d 194, 206 n. 9 (2d Cir. 1998)
(noting that the PPX Enterprises limitation is no longer
binding on the court, inasmuch as the New York Court of Appeals
more recently reiterated a broader standard in NBT Bancorp Inc.
v. Fleet/Norstar Fin. Group, Inc., 87 N.Y.2d 614, 621,
664 N.E.2d 492, 496, 641 N.Y.S.2d 581, 585 (1996), which reiterated a
definition of wrongful means under New York law to include
"physical violence, fraud or misrepresentation, civil suits and
criminal prosecutions, and some degrees of economic pressure.");
see also Ivy Mar Co., Inc. v. C.R. Seasons Ltd., No.
95-CV-0508, 1998 WL 704112, at *16 (E.D.N.Y. Oct. 7, 1998)
(recognizing abrogation and holding that dishonesty and unfair
means are also sufficient); but see Gottlieb v. Simon, 1998 WL
684839, at *3 (S.D.N.Y. 1998) (granting defendant summary
judgment after Hannex on grounds that plaintiff could not show
that defendant's alleged tortious interference was "criminal or
fraudulent"); aff'd sub nom. RKG Holdings, Inc. v. Simon,
182 F.3d 901 (2d Cir. 1999).

Even under the more stringent standard, plaintiffs can survive
the motion to dismiss. Under New York law, fraud is generally
defined as the gain of an advantage to another's detriment by
deceitful or unfair means. See 60 N.Y.Jur.2d Fraud § 1 (1987 &
Supp. 1999). Plaintiffs have alleged facts from which a juror
could conclude that Park Place principals lied about Catskill and
the status of the pending regulatory approval to induce the
Mohawks to break their agreement with Catskill.

Defendant's argument that plaintiffs have not shown "but for"
causation — that is, but for their wrongful conduct the
prospective business venture would have come to fruition — is not
properly considered on a motion to dismiss, as it involves issues
of fact. Plaintiffs clearly state in their complaint that they
view Park Place's efforts to become the exclusive operator of any
future Mohawk casinos as the reason the Monticello casino was not
built.

2. Plaintiffs' Have Adequately Pled Injury To The Business
Relationship

The Court has also considered whether Justice Teresi's ruling
compels dismissal of this claim on the grounds that Park Place
did not directly cause Catskill's losses, such as gambling
revenues and development fees, on the casino project.*fn13

Plaintiffs are correct that, with proper approvals, they would
have eventually been allowed to operate video gaming terminals
and other Class III gambling activities at the casino, despite
the lack of a valid compact with the State. Under the IGRA, a
tribe may engage in Class III gaming on tribal lands (including
trust lands) in any of three different ways, only one of which
appears to have been foreclosed by the Saratoga decision.
First, they may do so voluntarily, by a compact executed and
properly authorized under its respective laws by the tribe and
the state (including the state legislature, where required under
state law). 25 U.S.C. § 2710(d)(3). Failing this — and it appears
here that because of opposition to gambling in the New York State
Assembly such efforts likely will fail — the Tribe may bring an
action against the state under the statutory compact mediation
procedures in the IGRA. 25 U.S.C. § 2710(d)(7). If a Tribe sues,
a State asserts an Eleventh Amendment sovereign immunity defense,
and the action is dismissed on that basis, a Tribe can still
conduct Class III gaming pursuant to regulations promulgated by
the Department of the Interior in 1999. These regulations mandate
that the Secretary shall issue "gaming procedures" which are the
legal equivalent of a compact properly authorized by a state or
in a court action under IGRA. 25 C.F.R. § 291. The goal of these
procedures is to provide
for Class III gaming operations on tribal lands despite
opposition or lack of cooperation from the state. For instance,
the Mashantuckett Pequot Foxwoods casino in Connecticut has
operated under such procedures prescribed by the Secretary since
its inception. Mashantucket Pequot Tribe v. State of
Connecticut, 737 F. Supp. 169, aff'd. 917 F.2d 1024 (2d Cir.
1990). Thus, defendants incorrectly characterize Catskill's claim
that it would have obtained government approval of the casino as
"purely speculative."

Nevertheless, the above-described processes do take time.
Regardless of whether the Tribe had to renegotiate the compact,
bring suit to force those negotiations, or bypass the State in
the form of DO authorization, much work remained, and there would
appear to be no way to estimate the timetable for completion. I
thus find it hard to see how plaintiffs will be able to prove
that Park Place's actions were the proximate cause of future lost
profits.

However, whether or plaintiffs can show that their losses on
this venture stemmed directly (and not as the result of any
intervening causes) from Park Place's actions is a question of
fact, which is not properly decided on a motion to dismiss.
Plaintiffs should be allowed to submit evidence on any damages
that they are claiming flowed naturally and probably from
defendant's alleged interference, and the subsequent termination
of the Mohawk's relationship with Catskill. In addition, some of
plaintiffs' potential profits from this project (e.g., any
profits derived from Class II gaming operations) were not
necessarily dependent on successful negotiation of a compact with
the state. While those profits may be unduly speculative for
other reasons, I leave this and any other analysis of damages for
the parties' post-discovery motions.

3. The Noerr-Pennington Doctrine Does Not Apply To Defendant's
Actions

Park Place also argues that it is immune from liability under
the Noerr-Pennington doctrine. Defendant is incorrect.

The Noerr-Pennington doctrine provides immunity from
liability under the antitrust laws and other tort laws for
conduct seeking to influence government action. Eastern Railroad
Presidents Conference v. Noerr Motor Freight, Inc.,
365 U.S. 127, 136, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961); United Mine
Workers of America v. Pennington, 381 U.S. 657, 669-70, 85 S.Ct.
1585, 14 L.Ed.2d 626 (1965). Under this doctrine, the Supreme
Court has stated that "the Sherman Act does not prohibit two or
more persons from associating together in an attempt to persuade
the legislature or the executive to take particular action with
respect to a law that would produce a restraint or a monopoly."
Noerr, 365 U.S. at 136, 81 S.Ct. at 529. This immunity applies
to lobbying or petitioning in an effort to obtain an exclusive
arrangement with a governing body, such as a franchise or
license. See, e.g., Metro Cable Co. v. CATV of Rockford, Inc.,
516 F.2d 220 (7th Cir. 1975) (applying doctrine to petitioning of
municipal government for cable franchise); Video International
Production, Inc., v. Warner-Amex Cable Communications, Inc.,
858 F.2d 1075 (5th Cir. 1988) (applying doctrine to petitioning for
favorable interpretation of zoning codes so as to preclude
competition).

The facts of this case do not sound in a claim for unfair
competition. Plaintiffs have not alleged that defendant, in
attempting to obtain the Mohawk's business, tried to pass itself
off as the plaintiffs, or to misappropriate any of the
plaintiffs' property. See Randa Corp. v. Mulberry Thai Silk,
Inc., 2000 WL 1741680 at *3 (S.D.N.Y. Nov. 27, 2000). Quite the
opposite, in fact — the ostensible reason for the Mohawk's
decision to switch to Park Place was because defendant was not
Catskill.

Plaintiffs' Third Cause of Action is dismissed.

F. Donnelly Act Claims

The Donnelly Act provides, in pertinent part:

Every contract, agreement, arrangement or combination
whereby[:]

A monopoly in the conduct of any business, trade, or
commerce or in the furnishing of any service in this
state, is or may be established or maintained, or
whereby

Competition or the free exercise of any activity in
the conduct of any business, trade or commerce or in
the furnishing of any service in [New York] state is
or may be restrained or whereby

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